Deals Shaping the Medical Industry (10/2001)

Summarizing the deals in the medical industry.

In VitroDiagnostics

Joint Arrangements

/In VitroDiagnostics

Alpha Laboratories Ltd.

Xtrana Inc.

In a five-year agreement, Alpha Laboratories(clinical diagnostics and laboratory product supplier) will exclusively distribute in the UK and Ireland nucleic acid testing company Xtrana's Xtra Amp nucleic acid extraction kits and hemostasis products. (Sep.)

The Xtra Ampkit enables single-tube genomic DNA extraction and amplification from whole blood. Xtrana's hemostasis line includes the Biopool brand of products for assessing and diagnosing coagulation, fibrinolysis, platelet function, and other blood disorders. (Diagnostic blood test company Biopool International acquired Xtrana in May 2000 and retained its name.) Alpha, with established distribution channels in the UK and Ireland, will enable Xtrana to reach a larger audience. The addition of Xtrana's products will complement Alpha's offerings, which include chemistry reagents, cell counter and flow cytometer controls, and life science research, coagulation, and immunology products of various worldwide manufacturers.

American Bio Medica Corp.

Ansys Technologies Inc.

American Bio Medica(drugs-of-abuse diagnostic kits) licensed technology from Ansys (disposable diagnostics, sample prep devices) for incorporation in an on-site saliva test called Rapid Drug Screen OralStat-6 for drugs of abuse. (Aug.)

The test can simultaneously screen for THC, opiates, cocaine, PCP, amphetamine, and methamphetamine. It can detect the substances at room temperature within 10-15 minutes without a reader. This agreement enables American Bio Medica to improve its current on-site testing technology, and gives it the right to sell Rapid Drug Screen OralStat-6to the criminal justice, workplace, and drug treatment markets. Pending FDA approval, the product will be available for forensic use only. American Bio Medica primarily sells its tests for illegal drugs to the workplace, physician, corrections, clinical, and educational markets.

BP PLC

Vysis Inc.

Roche

Roche Diagnostics

BP PLCunit Vysis (develops tests for cancer, prenatal disorders, and other genetic diseases) licensed exclusive rights to Roche Diagnostics' patents and technology related to the process of identifying fetal cells in maternal blood. (Sep.)

Vysis intends to combine the intellectual property with its own in situ hybridization techniques to develop and sell maternal blood tests capable of finding fetal genetic abnormalities such as birth defects or mental retardation. Vysis's blood test—expected to reach clinical trials in 2004—would offer an alternative to the traditional amniocentesis, which carries some risk of fetal injury or death. It would be made up of DNA probes that could analyze abnormal numbers of chromosomes X, Y, 13, 18, and 21. In April, Vysis's AneuVysionwas cleared by the FDA to analyze amniocentesis specimens for specific chromosomal abnormalities in 24 hours.

diaDexus Inc.

Fujirebio Inc.

Fujirebio(largest domestic clinical diagnostics company in Japan) will get exclusive Japanese marketing rights to cancer tests that diaDexus (molecular diagnostics) is developing. (Aug.)

Fujirebio will pay licensing fees, support diaDexus' R&D efforts for three years, and pay sales royalties, and it has purchased Series D preferred stock in its partner. DiaDexus is a post-genomics company that has identified thousands of disease-associated molecular targets through its platforms in genomics and bioinformatics. To date, it has moved two diagnostic candidates into late preclinical development. Longer term, the company means to apply its target discovery technology to therapeutics as well as diagnostics.

Johnson & Johnson

LifeScan Inc.

St. Jude Medical Inc.

St. Jude Medical(cardiac devices; supplies 80% of the US market for mechanical heart valves) signed an exclusive US agreement to promote J&J company LifeScan's (self-tests for glucose levels and blood coagulation) Harmony monitoring system. The device measures the blood coagulation rate of patients who take the blood thinner warfarin. (Sep.)

Harmony, just approved by the FDA, includes a hand-held electronic monitor plus disposable test strips and works much the same as LifeScan's home system for glucose testing. The system eliminates the need for separate tests for quality control, since they have been integrated into the strip. Patients who take anticoagulants to reduce the risk of blood clots must monitor their coagulation time, or prothrombin time (PT), to be sure it stays inside the safe therapeutic range. Among the 2.5mm Americans who require anticoagulants are half a million who have mechanical heart valves and require lifelong therapy. With the ability to self-test at home, many warfarin patients will be able to check their PT as often as once a week to learn whether the dosage needs to be adjusted; at present, patients are typically monitored only every four to six weeks when they visit the doctor's office or lab. The Harmonysystem should be available next year, both to health care professionals and by prescription to patients who have been trained to use it.

Financings

/In VitroDiagnostics

ViroLogic Inc.

ViroLogic Inc.(developing phenotype drug resistance assays) completed a two-stage private placement, raising $16.25mm through the sale to institutional investors of Series A 6% convertible preferred stock and warrants to purchase common stock. The first stage brought in $6.65mm, and the second stage raised $9.6mm. (Sep.)

ViroLogic's PhenoSensetechnology tests the drug resistance of various viruses by exposing the virus to antiviral drugs in assay form. The company's PhenoSense HIV assay tests the response of the HIV virus to different drugs to determine resistance before giving the drug to the patient. ViroLogic also has an HIV genotype resistance assay GeneSeq HIV and assays to perform viral load testing. It is currently working on drug susceptibility tests for diseases such as Hepatitis B and C and herpes. Investment Banks/Advisors: UBS Warburg LLC; CIBC World Markets Corp.

Pharmaceuticals

Acquisitions

/Pharmaceuticals

Baxter International Inc.

Baxter Healthcare Corp.

Nexell Therapeutics Inc.

Nexell Therapeutics(cancer, autoimmune, and genetic diseases) transferred back to Baxter Healthcare worldwide licensing rights to its cell processing products, and sold the company certain assets and liabilities of its cell processing business, plus all of the stock of its wholly owned subsidiary, Nexell International SPRL for $4.3mm plus royalties. (Sep.)

Nexell wants to focus its business on the development of new cell therapies with applications to a range of diseases, including genetic blood disorders, autoimmune diseases, and cancer. The agreement reverses the licensing arrangement that the companies signed in 1997 and revised several times. It includes rights to Nexell's Isolex300i magnetic cell selection system (which Nexell will continue to utilize in its future focus). The Isolex 300i is used in cancer treatment to select hematopoietic stem cells and remove tumor cells from peripheral blood. Baxter will reimburse Nexell for some expenses during the transition period.

Cell Genesys Inc.

Calydon Inc.

To add to its late-stage cancer therapeutics pipeline, Cell Genesyshas acquired in a stock swap Calydon, a private company engineering adenoviruses as cancer treatments. (Aug.)

Calydon shareholders will get 935,000 CG shares valued at about $16mm, based on CG's 10-day pre-announcement average, plus CG will assume $2.6mm of its debt. This purchase will provide CG with Calydon's ARCA(Attentuated Replication Competent Adenovirus) technology that creates injectable or intravenously administered viruses to grow in and kill targeted cancer cells plus its prostate cancer drug pipeline with three candidates in Phase I/II. The products include CV706 for locally recurrent early-stage prostate cancer following radiotherapy; CV787 for patients with rising PSA values and locally recurrent forms of the disease after having radiotherapy and/or brachytherapy; and CV787 for patients whose cancer is hormone-refractory metastatic. Although its primary focus is on prostate cancer, using ARCA technology, Calydon also has developed promising leads for colon, bladder, and liver cancers. The addition of these products enhances CG's cancer offerings, which includes its GVAX Phase II cancer vaccines.

Celltech Group PLC

Thiemann Arzneimittel GMBH

To increase its presence in Europe's largest pharmaceutical market, Celltech Group PLChas purchased German company Thiemann Arzneimittel instead of acquiring Asta Medica's health care unit as earlier speculated. (Sep.)

Celltech paid about $46.1mm (UK97.1mm), approximately 1.2 times the company's 2000 sales. Thiemann was a part of Akzo Nobel's Organondivision until CSFB investment fund DLJ Merchant Banking Partners bought a majority share last August. The company, through its 87-member sales force, markets and sells therapeutics manufactured by other parties to general practitioners and specialists. Its leading product, Perenterol (S. boulardii), a treatment for diarrhea (licensed from French company Biocodex), has a 23% share in the German market and annual sales over $11mm. With additional products including Cotazym for pancreatic diseases; Orgaran, an anticoagulant; and Supertendin, an injectable corticosteroid, Thiemann's gastrointestinal, cardiovascular, rheumatology, cough/cold, and central nervous system offerings expand Celltech's primary therapeutic focus of immune system disorder and anti-inflammatory drugs.

Cellzome GMBH

GlaxoSmithKline PLC

Cell Map

Functional proteomics company Cellzome GMBHhas acquired Cell Map, the UK division of GlaxoSmithKline that maps cellular interactions. GSK retained a minority stake in the company. (Sep.)

Cell Map focuses on drug target discovery and validation by mapping protein-protein interactions in cells to better understand the operation of a target and determine those proteins which are therapeutically relevant. Cell Map scientists, operating out of a new UK-based laboratory facility, will become employees of Cellzome. Cell Map's expertise and R&D capabilities will enhance Cellzome's core large-scale functional proteomics technology that centers on identifying changes in interacting protein complexes through mass spectrometry, bioinformatics, computational biology, and biological validation approaches. The addition of the new company will enable it to expedite drug discovery, development, and commercialization.

Endorex Corp.

Corporate Technology Development Inc.

Endorex(developing oral formulations of injectable drugs) will acquire privately held Corporate Technology Development (develops oral and mucosal formulations of FDA-approved drugs for new indications) in a stock swap valued at about $11mm. CTD shareholders will receive 0.27 Endorex common shares for each CTD common shares, and 1.01 Endorex common share for each CTD Series A preferred share, with Endorex issuing approximately 9.4mm shares in all. (Aug.)

After the merger, CTD shareholders will own almost 43% of Endorex's outstanding common stock. CTD has an oral formulation of beclometasone dipropionate, orBec, in Phase III trials to treat intestinal graft-versus-host disease (GVHD). The FDA has granted orphan drug and fast-track status for development of the pharmaceutical. The company is also developing Oraprine(azathioprine) in Phase I trials for transplant rejection and Phase I/II trials to treat autoimmune diseases including GVHD. CTD brings $5mm in cash, eight US and international patents, and ten pending patent applications. CTD's chairman, Colin Bier, PhD, will serve as chairman and CEO of the combined company, and Endorex's president and CEO Michael Rosen will change title to president and COO. Investment Banks/Advisors: Wells Fargo Van Kasper (Endorex Corp.)

Genzyme Corp.

Pharming Group NV

Pharming NV

Genzymewill buy certain assets of Pharming NV; the biotech's parent, Pharming Group NV, is operating under receivership. (Sep.)

Genzyme and Pharming have been working together since 1998 through a joint venture that was developing a compound, originally discovered by Pharming, to treat Pompe's disease. The treatment is now in clinical trials and this acquisition, which is subject to certain conditions, includes a manufacturing facility that is supplying the compound.

MicroHeart Inc.

AngioSense Inc.

MicroHeart(devices for site-specific delivery of drugs) has acquired AngioSense, a privately held company creating needle-free injection technology to deliver drugs to cardiovascular and cancer patients. (Sep.)

MicroHeart will add AngioSense's needle-free and jet delivery devices to its own delivery tools with the intention of incorporating the needle-free injection devices into its own surgical, minimally invasive, and catheter-based delivery technologies, allowing pharmaceuticals, biotherapeutics, and cells to enter a patient's body. MicroHeart will take over AngioSense's role in an agreement with Bioject Medical Technologiesmodifying Bioject's systems to design an instrument that delivers gene therapies during minimally invasive surgical procedures. AngioSense had also signed with Repair to deliver fibroblast growth factor protein and fibrogen with its needleless jet injection delivery system.

OSI Pharmaceuticals Inc.

British Biotech PLC

British Biotech PLC(matrix metalloproteinase inhibitors, MMPIs) is restructuring in hopes of cutting its burn rate while expanding its product pipeline. It will now give up most of its early-phase work to focus on clinical development, and has agreed to sell part of its preclinical research operations to the US discovery company OSI Pharmaceuticals. (Aug.)

OSI will pay $12.4mm (UK8.7mm) and gains discovery skill sets in medicinal and analytical chemistry and in drug metabolism and pharmacokinetics. While historically it has done drug discovery for partners, OSI will now have BB's pilot manufacturing plant, which can scale up small-molecule production for preclinical toxicology testing, as well as turn out enough clinical-grade material to carry development of its in-house candidates through Phase II testing. It also gets the right to screen BB's libraries of metalloenzyme inhibitors (MEIs) and other chemicals and will pay royalties on resulting drugs. About 60 of BB's 145 employees (mostly discovery people) will transfer to OSI. The UK firm is dropping its independent research in MMPIs and other MEIs, but it will continue the R&D collaborations it has in those areas with Schering-Plough, Serono, and now OSI, as well as its program in MEI-based antibiotics. BB says the divestiture will cut its annual expenditure by about $8.6mm, which extends its cash life to four years at current spending levels. It will use these cost savings plus the money from the sale to generate late-stage clinical data from its existing product portfolio and to develop new products it plans to in-license from biotechs.

Taisho Pharmaceutical Co. Ltd.

Tanabe Seiyaku Co. Ltd.

Japan's eighth largest drug company Taisho Pharmaceuticalwill merge with the tenth largest, Tanabe Seiyaku. The companies will operate under a holding company to become the country's third largest drug developer. Taisho shareholders will get one share in the new company for each share they hold and Tanabe shareholders will receive 0.55 shares in the new company for each of their shares. (Sep.)

The companies will consolidate their prescription and OTC pharmaceutical businesses so that Tanabe's OTC drug business will be combined into Taisho's OTC offerings and Taisho's prescription drug business into Tanabe's prescription pharmaceuticals. After the merger has been completed, the new company will trade on the Tokyo Stock and Osaka Securities Exchanges. Tanabe's president, Toshio Tanaka, will become chairman of the holding company; Taisho's president and CEO, Akira Uehara, will be president of the new company; and Taisho's chairman will hold the office of director and honorary chairman. Tanabe and Taisho will each have equal representation on the board of directors. Taisho, founded in 1928, reported 2001 sales of $2.2bn with net income of $247mm and has produced such over the counter products as Pabron Sand Pabron N cold remedies; Lipovitan D nutrient drinks; Semper for motion sickness; Naron Ace to relieve pain; Colac for gastrointestinal indications; and topical medications RiUP hair growth generator, and DermarinL for athlete's foot. Its prescription drugs include the antibiotic Clarith, Solon for ulcers, Ankaron and Metligine for cardiovascular indications, Rinlaxer muscle relaxant, and Pandel topical corticosteroid. Tanabe, founded in 1933 and which had 2001 revenues of $1.5bn and net income of $24mm, focuses on prescription medications that include the cardiovascular drugs Herbesser, Tanatril, and Maintate; Sermion for cerebral circulation; Lochol to treat hypercholersterolemia; Gastrom to treat gastritis and gastric ulcers; and Proscope, a non-ionic X-ray contrast agent used in urography and angiography.

Joint Arrangements

/Pharmaceuticals

4SC AG

Axxima Pharmaceuticals AG

German biotechs 4SC AG(drug screening) and Axxima Pharmaceuticals AG (formerly VirGene; signal transduction) will jointly research small-molecule kinase inhibitors to develop as cytomegalovirus (CMV) infection treatments. (Sep.)

Axxima, in exchange for milestones and royalties, will get exclusive rights to any CMV kinase inhibitors for infectious disease indications that result from the partnership, while 4SC gets rights in all other therapeutic areas. Applying its high-throughput technology to Axxima's protein kinase assays, 4SC will screen the kinases against its own compound library to generate potential leads. Protein kinases transmit molecular signals from a cell's exterior to the nucleus, activating or suppressing certain genes. When this signal transduction process in the cell is disrupted, disease can result. Intervening in the process with small-molecule kinase inhibitors may help prevent or stop disease progression. Axxima also has compounds in development in other antiviral therapeutic categories including HIV and HBV.

Abgenix Inc.

Agensys Inc.

Abgenixand Agensys (cancer therapeutics; formerly UroGenesys) have signed a five-year deal to develop human monoclonal antibody therapies against Agensys's cancer antigen targets. (Aug.)

Abgenix will apply its antibody technology to the targets—which could include antigens related to prostate, kidney, bladder, lung, colon, or ovarian cancers. Agensys gets an exclusive option to license any of the products developed with up to 25 of its antigen targets, and is responsible for development, manufacturing, and marketing. For each product licensed, it pays Abgenix R&D money, license fees, and potential milestones, plus sales royalties. Agensys's internal gene discovery and validation program targets cancers with significant market opportunities and major unmet clinical needs.

Active Pass Pharmaceuticals Inc.

Tranzyme Inc.

Tranzyme(genetic engineering) will combine its TExT (Tranz Expression Technology) and expertise in mammalian cell cloning and protein expression with several sets of Active Pass's (drugs that focus on ABC transporters) targets to create new therapeutics. (Sep.)

Tranzyme will deliver several sets of Active Pass's ABC transporter gene sequences into mammalian cells. It will then use its TExT(Tranz Expression Technology) to express and purify the resulting proteins. ABC transporters—molecular pumps found in membranes of cells throughout the body—have been linked to various diseases: beta-amyloid peptides collect in the brain to cause Alzheimer's disease, improper removal of all-trans retinal causes macular degeneration, and cholesterol deposits in the vasculature leads to atherosclerosis. Active Pass has already established a program to find a therapeutic for Alzheimer's disease targeting ABC transporters.

AlphaVax Inc.

Cytogen Corp.

Progenics Pharmaceuticals Inc.

PSMA Development Co. LLC

Through their PSMA Development Co.joint venture, Cytogen (antibodies and molecular recognition therapies for cancer) and Progenics Pharmaceuticals (immunological pharmaceuticals for viral diseases) have licensed exclusive worldwide rights to use AlphaVax's AlphaVax Replicon Vector (ArV) system to develop a therapeutic prostate cancer vaccine. (Sep.)

The partners are incorporating their respective technologies into a cancer vaccine delivery and expression system for prostate-specific membrane antigen (PSMA)—a marker expressed within most prostate cancer tumors, but not in normal blood vessels—which they hope to have in Phase I/II by next year. AlphaVax's ArVsystem (derived from an avirulent form of Venezuelan equine encephalitis virus) reengineers a virus to substitute a specific gene for a portion of its original genome, so the virus produces the protein(s) encoded by the gene of interest rather than more virus. ArV offers advantages over other vaccine technologies such as natural targeting to the immune system's antigen-processing cells; production of high antigen expression levels; and induction of humoral, cellular, and mucosal immune responses. Cytogen and Progenics created the PSMA Development Co. in 1999 to develop therapeutic vaccines using its PSMA technology, which stimulates a patient's immune system and uses the body's own defense mechanisms to identify and destroy prostate cancer cells. It has shown in preclinical trials its ability to mimick the PSMA structure expressed on these cells.

Amarillo Biosciences Inc.

Atrix Laboratories Inc.

Atrix Laboratories(drug delivery) licensed exclusive US, Canadian, and European rights from Amarillo Biosciences to orally administered low-dose interferon alpha to treat oral papillomavirus warts in HIV-positive patients and Behcet's disease. (Sep.)

Atrix paid $485k up front and will cover R&D costs, provide clinical and regulatory milestones, and pay royalties on its sales of any resulting products. The FDA has granted orphan status to the product for these specific applications. Behcet's disease is a lifetime chronic condition afflicting about 15,000 Americans, causing inflammation in the small blood vessels. It produces a myriad of symptoms including oral and genital ulcers, skin lesions, and CNS and gastrointestinal disorders.

American Home Products Corp.

Wyeth Lederle Vaccines

Inhibitex Inc.

The Wyeth-Lederle Vaccinesunit of American Home Products received an exclusive worldwide license to the MSCRAMM (Microbial Surface Components Recognizing Adhesive Matrix Molecules) protein technology of Inhibitex (therapeutics for infectious diseases) to develop human vaccines targeting staph infections. (Sep.)

Inhibitex gets an up-front payment, R&D support, and milestones that could total $23mm, plus sales royalties. Inhibitex's core technology is based on MSCRAMMproteins, a family of cell-surface adhesins expressed by Staphylococcus aureus and responsible for the organism's ability to attach to host tissue. The technology embodies a broad platform for developing antibody-based proteins designed to inhibit the adhesion of pathogenic organisms to host tissues to prevent or minimize the severity of infection. The companies will collaborate to create vaccines designed to specifically treat S. aureus and S. epidermidis.

American Home Products Corp.

Karo Bio AB

In its largest collaboration, Sweden-based Karo Bio AB(nuclear receptor-based drug discovery) will work with American Home Products to co-develop a drug to prevent and treat atherosclerosis. (Sep.)

If two products result from the three-year deal, Karo may receive an up-front payment, R&D funding, and milestones worth up to $100mm based on development and worldwide approval of the products, as well as 7-15% royalties and bonuses from achieving certain sales goals. To the collaboration Karo will add its technology, knowledge about the causes of atherosclerosis, and expertise in drug discovery based on nuclear receptors, clinical development, and marketing, while AHP contributes its strengths in drug discovery and development in the area of cardiovascular disease. The companies will initially focus on atheroscleosis in patients with Tangier's disease who lack the functioning transport proteins that are produced by the stimulation of liver X receptors. Those proteins can dissolve cholesterol in arteries and thus prevent atherosclerosis. Research will later be expanded to focus on other therapeutic areas.

Amersham PLC

Amersham Pharmacia Biotech AB

Vertex Pharmaceuticals Inc.

Aurora Biosciences Corp.

Amersham Pharmacia Biotech(life science business of Amersham PLC) and Vertex Pharmaceuticals' Aurora Biosciences (fluorescence assay and screening company) will market green fluorescent protein (GFP) technology to accelerate the drug discovery and development process. (Sep.)

GFP technology uses the light from fluorescent molecules to show molecular and cellular activity as seen by a color change. The function of tiny amounts of biomolecules can then be monitored and many aspects of cell function in single living cells can be observed in real-time. GFP can be applied to the fields of functional genomics, high-throughput screening, and gene profiling to assess compound toxicity, and has been used in drug discovery for cancer and Alzheimer's disease. To expand their market position in GFP technology, Aurora will combine its expertise in GFP with AP Biotech's strengths in global sales and marketing. The agreement will also extend the marketing of the technology to pharmaceutical and biotech companies and academic research institutions. Aurora has licensed GFP to Becton Dickinson's Clontech, Genentech, Exelixis, and American Home Products' Wyeth-Ayerst Research.

Array BioPharma Inc.

Takeda Chemical Industries Ltd.

Drug discovery company Array BioPharma(chemoinformatics, structural biology) will work with Japanese pharmaceutical Takeda Chemical Industries to develop small-molecule drug leads against an undisclosed Takeda target. (Sep.)

Array gets fees from Takeda depending on the number of Array scientists engaged in the R&D. Takeda also pays development milestones and royalties on its sales of any products resulting from the deal. Array's structural biology platform is capable of crystallizing and producing three-dimensional models of proteins, which are then co-crystallized with a drug lead to provide chemists with information during the drug discovery process. The company also offers chemistry-related research services such as high-throughput screening, assay development, and predictive chemoinformatics, which uses computer software to manage and analyze information about chemicals and molecules.

Array BioPharma Inc.

Trimeris Inc.

Trimeris(therapeutics to inhibit viral fusion) and Array (drug discovery using chemistry, structural biology, and chemoinformatics) will collaborate on the discovery and development of small-molecule compounds to treat HIV and respiratory syncytial virus (RSV). (Aug.)

Trimeris will screen Array's library of small-molecule compounds—against HIV and RSV fusion protein targets—for which it gets nonexclusive access. Array will then use its drug discovery technology to optimize the leads. Array will work on an exclusive basis during the length of the collaboration which includes joint preclinical development. Array gets reseach funding and royalties based on the achievement of developmental and marketing milestones. Trimeris will assume responsibility for further development. Trimeris is developing two fusion inhibitor peptides with Rochewhich have both been granted fast-track status by the FDA—Phase III T-20 and Phase I/II T-1249. The drugs are designed to inhibit the virus from fusing to and penetrating a host cell.

Array BioPharma Inc.

Vertex Pharmaceuticals Inc.

Array BioPharma(drug discovery using chemistry, structural biology, and chemoinformatics) and Vertex Pharmaceuticals (genomics-based drug discovery and development) will discover and develop small-molecule drugs that target phosphatases. (Sep.)

Array receives an up-front payment and research funding for three years and may get clinical milestones for resulting products as well as additional predetermined sales milestones if the products are marketed. It will conduct the initial drug discovery by generating, optimizing, and profiling leads, while Vertex will handle clinical development and marketing. The companies seek to accelerate the drug design by examining two phosphatases that are ideal targets for small-molecule drugs and which are associated with cancer and diseases of the autoimmune, inflammatory, cardiovascular, metabolic, and neurological systems. Vertex is currently involved in other phosphatase programs using its chemogenomics platform that aims to discover and describe the possible drug compounds that are directed at all potential drug targets. Array will use the collaboration to build upon its portfolio of drug candidates and add expertise in additional therapeutic areas.

Atrix Laboratories Inc.

FH Faulding & Co. Ltd.

Faulding Pharmaceuticals

Faulding Pharmaceuticalslicensed the rights from Atrix Laboratories (drug delivery) to sell Leuprogel, leuprolide acetate for subcutaneous depot, in Australia and New Zealand. The drug (an LHRH agonist) is indicated for advanced prostate cancer and is in Phase III trials. (Aug.)

Atrix gets an up-front payment, milestones, and royalties on net sales, and will manufacture the product. Faulding is responsible for handling the regulatory approval process in the licensed territories. The deal covers one-, three-, and four-month sustained-release Leuprogelformulations. Earlier this year Sanofi-Synthelabo licensed US and Canadian rights, and MediGene acquired a European license.

Aventis SA

Aventis Pharma

Aventis Pharma AG

Cerestar Deutschland GMBH

Labopharm Inc.

Aventis Pharma AG's US subsidiary Aventis Pharma, Labopharm(drug delivery), and an unnamed pharmaceutical company will use Labopharm's Contramid controlled-release technology to develop formulations for a brand of Aventis drugs. (Sep.)

In the multi-year agreement, Labopharm gets milestones upon completion of clinical trials—expected to begin within the next three months—and royalties for sales of resulting products. Aventis and the undisclosed company receive worldwide rights to use Labopharm's Contramidtechnology in a certain therapeutic area in exchange for the right to further develop additional compounds for the two companies. Manufactured by Cerestar (starch manufacturer/producer), Contramid is a patented and cost-effective controlled-release drug delivery system—based on high amylose starch—for the oral administration of solid dosage forms. The manufacturing process for the technology produces an acceptable sized tablet with a high proportion of the active ingredient. Last year, Aventis' brand of the drug had global sales of over $650mm.

Aventis SA

Aventis Pharma

Aventis Pharma AG

Coley Pharmaceutical Group

Aventis Pharmalicensed exclusive worldwide rights to Coley Pharma-ceutical's allergic disease product CpG 9328 and up to three more CpG immunomodulatory oligonucleotide molecules for asthma and allergic rhinitis. (Aug.)

The company will pay Coley milestones and double-digit royalties on its sales of any products developed. CpG 9328 and one of the other three compounds are in preclinical trials; the remaining two are yet undiscovered. Coley's CpG molecules are designed to activate the immune system to fight disease. In patients with asthma and allergic rhinitis, the molecules suppress allergic responses that cause airway inflammation and bronchial spasms, and induce normal immune responses.

Aventis SA

Aventis Pharma

Aventis Pharma AG

ViroPharma Inc.

Aventis Pharma AG's US subsidiary Aventis Pharmaceuticalswill co-develop and co-promote ViroPharma's (discovers and develops antiviral drugs) oral antiviral drug Picovir (pleconaril) in the US. (Sep.)

ViroPharma recently submitted an NDA for Picovir, seeking marketing approval for the product as a treatment of viral respiratory infection (VRI)—a severe form of the common cold—in adults. Under the agreement, ViroPharma gets an initial $25mm payment plus potential regulatory and other milestones. Aventis and ViroPharma will share the profits 55% and 45%, respectively, if the FDA grants approval to Picovirand Aventis will handle all data relating to sales revenues. Aventis will pay fees to ViroPharma for co-promoting to doctors in the US, certain of its own prescription drugs that compliment Picovir. The product inhibits picornaviruses—the primary cause of VRIs—and has shown in clinical trials to reduce the severity of common cold symptoms within 12 to 24 hours following the initial dose. ViroPharma licensed exclusive US and Canadian rights to the product from Sanofi-Synthelabo in December 1995.

Bristol-Myers Squibb Co.

ImClone Systems Inc.

Bristol-Myers Squibblicensed US, Canadian, and some Japanese co-promotion rights to ImClone Systems' lead cancer drug, IMC-C225, a monoclonal antibody designed to target and block the epidermal growth factor receptor on which certain solid tumors depend for their growth. (Sep.)

ImClone gets $1bn, payable in three cash milestones: $200mm at signing, $300mm on FDA acceptance of regulatory filings (ImClone began a rolling BLS filing in June 2001), and $500mm upon approval. It will be responsible for all regulatory filings and manufacturing and will sell the drug to BMS at a typical industry markup plus get 39% of US and Canadian net sales over the 17-year life of the agreement. BMS says the markup plus royalties translate into a net profit share of 60% for ImClone and 40% for BMS. In Japan (where ImClone has also partnered with Merck KGAAfor IMC-C225), BMS and ImClone will share development and marketing costs and evenly split sales revenues. Bristol is also acquiring a 19.9% stake in the company for another $1bn through a tender offer to ImClone shareholders of 14.4mm shares at $70 each (a 36% premium). The company itself will get no money from the tender offer, unless shareholders tender less than 19.9% of total shares, in which case the company will make up the difference. Bristol will fund studies for future approvals and marketing, but the two companies are equally splitting costs for non-registration oriented Phase IV trials. BMS is getting a right of first offer for ImClone's anti-VEGF antibody and right of first negotiation on all other pipeline products for five years. The deal gives Bristol a late-stage drug with patent protection to 2018, offsetting the loss last spring of market exclusivity for its cancer product Taxol. IMC-C225 is in Phase II/III clinical trials to treat colorectal, pancreatic, head and neck, and non-small cell lung cancers, and has received FDA fast-track status for colorectal cancer. BMS expects to launch the drug in the first part of 2002 and to generate over $1bn in annual sales by 2006.

BTG PLC

Genentech Inc.

BTG(acquires and outlicenses early-stage life sciences technologies) licensed exclusive development and marketing rights to Genentech's atrial natriuretic factor (ANF) peptides to treat acute congestive heart failure, acute renal failure, and renal hypertension. (Sep.)

The ANF synthetic peptides mimic the natural human ANF hormone and regulate diuretic, natriuretic, and vasodilatory activity in humans. In preclinical trials, the imitation hormones have demonstrated that they are more efficacious than their natural counterparts; they are not discharged from the body as quickly, and thereby show increased metabolic stability. BTG will outlicense the peptides to partners interested in selling them for acute care applications. Two US patents have been issued for the ANF peptides, and in Europe and Japan patent approval is pending.

Cerylid Biosciences

Oxagen Ltd.

Gene discovery company Oxagenand Cerylid (genomics) will integrate each other's family-based genetic studies to develop a combined gene discovery program for endometriosis, a painful disease characterized by misplaced uterine tissue lining. (Aug.)

Oxagen's Oxford Endometriosis Gene Studyis being developed with the University of Oxford's department of obstetrics and gynecology, while Cerylid is conducting its genomics research in conjunction with Gene GRC, a collaboration among Australian geneticists. The combined program will review medical records and genotype the entire genome of data collected from a sample of at first 1,300 families (later expected to increase to 2,000) in which at least two sisters are affected by endometriosis. Through the collaborative effort, the companies hope to discover the genes and polymorphisms that cause endometriosis, and from these leads develop targets that will generate both diagnostics and therapeutics for the disease. Oxagen has a similar collaboration with Incyte Genomics for osteoporosis genes.

Cipla Ltd.

Ranbaxy Laboratories Ltd.

Indian pharmaceutical companies Ranbaxy(mostly sells generics) and Cipla will co-market Ranbaxy's recently approved once-a-day broad-spectrum antibacterial agent Cipro (ciprofloxacin) in India. Ranbaxy used its drug delivery platforms to create the oral therapeutic, which it says is an improvement to existing ciprofloxacin formulations. (Aug.)

The companies both have once-daily ciprofloxacin products on the market already—Ranbaxy sells Cifranand Cipla sells Ciplox. Combined, those two antibacterials make up over 30% of India's total ciprofloxacin market. In a strategy to consolidate market share, Ranbaxy will promote Cipro under its Cifran brandname, and Cipla will market it as Ciplox. Ranbaxy will handle all manufacturing. In 1999, Bayer licensed exclusive rights to sell Cipro in all territories outside of India. Ranbaxy still also holds exclusive co-promotion rights to sell the generic in certain unspecified markets.

Connetics Corp.

Mipharm SPA

Mipharm(skin care and women's health therapeutics) has licensed Italian marketing rights for three drugs from Connetics' dermatology pipeline—Olux (clobetasol propionate), permethrin, and Hexifoam. (Sep.)

In exchange for these rights, Mipharm will pay up-front license fees, milestones, royalties, and cover costs associated with and manage the marketing approval process for Oluxin Europe. Connetics' Olux is an FDA-approved, high-potency topical corticosteroid foam for moderate to severe scalp dermatoses; the foam formulation of permethrin treats scabies; and Hexifoam is a thermophobic skin disinfectant foam containing chlorhexidine acetate and ethyl alcohol that kills bacteria and is also active against fungi, yeasts, and viruses. Many of Connetics' products are based on topical drug delivery formulations and technologies acquired through its purchase of Soltec Research Pty. last March. The addition of these three drugs will enhance Mipharm's dermatology pipeline that includes products in development for seborrhoeic dermatitis and psoriasis. The three-year-old company's other core therapeutic areas are gynecology/women's health care and acute special care.

Corvas International Inc.

Dyax Corp.

Corvasand Dyax (phage display) will collaborate to discover and develop cancer therapeutics based on serine protease inhibitors. (Sep.)

The companies will share development costs as well as commercialization rights and profits from any resulting products. The partnership will incorporate Dyax's phage display technology to identify compounds that bind to two of Corvas's serine protease targets. Using Corvas's high-throughput screening technology will enable the partners to further develop and validate the leads as pharmaceutical candidates. Serine proteases are known to be agents in cancer growth and progression, particularly in solid tumors such as those in breast and prostate cancers. Inhibiting serine proteases may encode a tumor suppressor protein that causes cancer cells to become highly malignant and metastatic. The deal gives Corvas access to Dyax's phage display technology, which rapidly identifies proteins, peptides, or antibodies that bind to molecular targets, which will help in faster target validation, while Dyax benefits from a potentially enhanced product development pipeline.

Deltagen Inc.

Eli Lilly & Co.

Deltagenwill use its knockout mice to evaluate targets from Eli Lilly's pipeline that may lead to therapeutic secreted proteins. Each company may select molecules for commercial development, paying the other royalties on sales of the resulting drugs. (Aug.)

Lilly receives certain acquisition options, and each company gets specified rights in the areas of co-promotion, co-development, and profit-sharing. Deltagen's technology platform determines the in vivo function of secreted proteins in mammals. In a knockout mouse, the gene of interest has been disrupted so that researchers can see the changes that take place in its absence; this method of analyzing the gene's function takes into account the many interactions among genes, other biochemical events that occur inside the cell, and the influences of proteins and metabolites.

Dow Chemical Co.

Epicyte Pharmaceutical Inc.

Johnson & Johnson

Centocor Inc.

After collaborating for a year on a way to make crop plants produce therapeutic human monoclonal antibodies, Epicyte Pharmaceuticaland Dow Chemical's agrosciences subsidiary will put the technology to work on an antibody from J&J's biotech company Centocor. (Sep.)

Dow contributes to the project its expression technologies, crop production expertise, and capabilities in corn processing. It will produce the undisclosed MAb using Epicyte's Plantibodytechnology, which can yield proteins in huge quantities. After evaluating the success of this method, Centocor has the option to enter a commercial supply agreement for a variety of therapeutic indications. Manufacturing antibodies through transgenic plant-based expression is more economical than using mammalian systems, and the output does not have to be screened for viral or bacterial toxins, since plants are not susceptible to human disease.

Elan Corp. PLC

Elan Pharmaceuticals

Exelixis Inc.

Over a three-year period, Exelixis(comparative genomics) will use its combinatorial chemistry technology to produce a small-molecule library with which both the company and Elan Pharmaceuticals can perform high-throughput screening. (Aug.)

Exelixis gets an up-front fee, and milestones upon delivery of compounds. Both companies get rights to resulting compounds for internal drug discovery and collaborations with other companies. The library, which now has 1.3 million compounds is expected to contain 2 million by the end of 2001, and may hold up to 10 million compounds in five years. While Exelixis has signed previous agreements with Bayer, Bristol-Myers, Pharmacia, and Protein Design Labsto accelerate the development of targets to treat diabetes, obesity, Alzehimer's disease, and cancer, this is the first agreement that Exelixis has signed that directly involves its combinatorial chemistry technology.

Eli Lilly & Co.

Minnesota Mining & Manufacturing Co. (3M)

3M Pharmaceuticals Inc.

Eli Lilly & Co.and 3M Pharmaceuticals (a division of Minnesota Mining and Manufacturing) have entered an agreement to collaborate on 3M's Phase III treatment for genital herpes, resiquimod. (Sep.)

3M gets $100mm up front, regulatory milestones, and marketing-based royalties, and will continue to fund the R&D for Phase III clinical trials of resiquimod. Lilly receives exclusive worldwide rights to market the product in various applications relating to herpes (including genital herpes), while 3M retains an option to co-promote the compound to certain US consumer groups. Resiquimod is from a class of immune response modifier (IRM) molecules that stimulate the body to fight viral infections. In vitro studies have shown it to induce certain cytokines such as alpha interferon, interleukin-12, and tumor necrosis factor. Studies also suggest that resiquimod may increase the period between outbreaks of genital herpes and that it can potentially suppress infection over time, thus reducing the need for daily treatments. 3M currently markets Aldara(imiquimod) cream—the first globally marketed IRM which is used to treat external genital warts.

FibroGen Inc.

Sankyo Co. Ltd.

In a three-year deal, fibrotic disease therapy company FibroGenand Sankyo will jointly develop drugs with a focus on treating diabetic nephropathy, retinopathy, renal, liver, and pulmonary fibrosis, organ transplant rejection, and atherosclerosis. (Sep.)

In exchange for up-front payments, research funding, and milestones, Sankyo gets North American co-promotion rights to therapeutics developed for renal fibrosis, cardiovascular disease, hepatic fibrosis, and diabetic retinopathy indications. Additionally, Sankyo will pay royalties on sales outside North America in the specified therapeutic categories while FibroGen retains global rights in all other areas. The collaboration focuses on discovering and developing small-molecule drugs that block the TGF-beta cytokine pathways to prevent the activation of CTGF (Connective Tissue Growth Factor), a cytokine necessary for the fibrotic response mechanism in tissues. Overexpression of CTGF is implicated in various fibrotic disorders including scleroderma, Crohn's disease, and many cancers. Inhibiting the CTGF signal transduction pathway may prevent production of the pathogens that lead to fibrosis.To inhibit CTGF activity, FibroGen is also developing MAbs, which have shown promise for kidney and lung fibrosis applications in preclinical trials.

First Horizon Pharmaceutical Corp.

Otsuka Pharmaceutical Co. Ltd.

Otsuka America Pharmaceutical Inc.

In a three-year profit sharing agreement, Otsuka's US division Otsuka America Pharmaceuticalwill co-promote to cardiologists in the US chronic disease therapeutic company First Horizon's Nitrolingual pump spray (nitroglycerin) for angina or chest pain related to coronary artery disease. (Sep.)

Nitrolingualis a metered-dose spray approved in the US for angina indications. Otsuka, which presently markets its Pletal (cilostazol)—a treatment for intermittent claudication (leg pain) that results from peripheral artery disease—to US cardiologists, will also contribute a 150-member US salesforce, doubling First Horizon's current promotional staff. The companies feel that promoting these compatible products together will result in reaching a larger audience and potentially increasing sales. Pharmacia & Upjohn has co-promoted Otsuka's Pletal tablets in the US since a 1998 agreement.

G. Pohl-Boskamp GMBH & Co.

Nastech Pharmaceutical Co. Inc.

G. Pohl-Boskamp GMBH & Co.(pharmaceutical development) received exclusive rights to develop and market in Europe Nastech Pharmaceutical's (nasal drug delivery) intranasal morphine product to treat moderate to severe pain. (Sep.)

Nastech gets an up-front payment, milestones, and double-digit royalties based on the achievement of certain goals. It will accelerate US development of the product—where it retains rights—and can access the preclinical and clinical data generated by Pohl, which will complete product development in Europe and handle all manufacturing and marketing there. The opoid agonist product—the first nasal dosage form of morphine—works more efficiently because it is absorbed directly into the circulatory system without the reduction in therapeutic effects from gastrointestinal and liver metabolism that occurs with oral dosages. Currently, morphine is marketed in dosage forms including injectable, oral, and rectal; transmucosal oral delivery is the only method approved for breakthrough pain and is limited to opioid-tolerant cancer patients. Nastech believes that a nasal dosage form of the drug will allow patients to treat themselves using a therapy that provides quick pain relief.

GlaxoSmithKline PLC

Tanabe Seiyaku Co. Ltd.

GlaxoSmithKlinesigned a broad R&D and marketing alliance with Tanabe covering some of the latter's preclinical candidates, including compounds to treat psychological and neurological disorders, and diabetes. (Sep.)

The partners are still working out the details, but said that they will share marketing rights in certain territories, and that in the future the agreement could be expanded to include other compounds. In July GSK signed a similar agreement with Shionogi.

InKine Pharmaceutical Co. Inc.

Zeria Pharmaceutical Co. Ltd.

InKine Pharmaceutical(mostly cancer and autoimmune disease drugs) exclusively licensed to Zeria Pharmaceutical (drugs for metabolic, central nervous system, and digestive disorders) Japanese rights to develop, manufacture, and market its first product, Visicol, as a bowel cleansing agent. (Sep.)

InKine gets an up-front licensing fee of $500k and $2mm in milestones, plus sales royalties. Zeria will take responsibility for all development costs. InKine says that Visicol(sodium phosphate monobasic monohydrate USP and sodium phosphate dibasic anhydrous USP) is the only tablet bowel purgative for use prior to colonoscopy. The company launched the product at the beginning of the year and has completed Phase I clinical trials for its use prior to sigmoidoscopy (a procedure in which a scope is used to view a section of the colon) and to treat constipation.

InterMune Inc.

Eli Lilly & Co.

InterMunehas licensed exclusive worldwide development and marketing rights to Eli Lilly's oritavancin, a semi-synthetic glycopeptide antibiotic in development to treat resistant gram-positive bacterial infections. (Sep.)

Lilly gets $50mm up front plus milestones and royalties. Oritavancin is in Phase III clinical trials to treat complicated skin and skin-structure infections, in Phase II for bacteremia and Lilly expects a 2004 launch. Lilly says that oritavancin's advantage is that it kills harmful and resistant bacterial strains, rather than inhibiting them. The deal allows Lilly to get the optimum benefit from the drug while redirecting its partnering efforts to other late-stage products. The drug will complement InterMune's big seller, Actimmune(an interferon gamma-1b injection), which is on the market to treat two disorders: chronic granulomoutous disease, an inherited deficiency of the immune system that leaves patients vulnerable to frequent and severe bacterial and fungal infections; and severe malignant osteopetrosis. The drug is also in Phase III for idiopathetic pulmonary fibrosis and multidrug-resistant tuberculosis.

InterMune Inc.

Maxygen Inc.

Maxygen Holdings Ltd.

InterMune(pulmonary, infectious disease, and cancer therapeutics) and Maxygen (protein drugs and vaccines) will develop and market next-generation interferon gamma products. (Sep.)

Maxygen gets up-front license fees, full research funding, and milestones that could exceed $60mm, plus sales royalties. In return InterMune gets exclusive worldwide marketing rights for all human therapeutic indications. It will fund optimization and development of the products and advance into the clinic candidates that Maxygen creates. InterMune expects to have a product with enhanced pharmacokinetics and a less-frequent dosing regimen in clinical trials within the next two to three years. The collaboration combines Maxygen's protein modification and preclinical process development capabilities with InterMune's clinical development and marketing expertise. InterMune has been a market leader in the interferon gamma therapeutics arena with Actimmunewhich treats chronic granulomatous disease and severe, malignant osteopetrosis.

Johnson & Johnson

Ortho Biotech

Zeltia SA

PharmaMar SA

Johnson & Johnson's Ortho Biotechwill co-develop an oncology compound that has been brought to clinical trials by Zeltia subsidiary PharmaMar SA, a Spanish company that develops drugs it gets from marine sources. (Aug.)

The product, ET-743, was originally isolated from a marine invertebrate. PharmaMar has conducted Phase II clinical trials in sarcoma, breast cancer, and other tumors, and plans to file for EC approval soon. Ortho Biotech pays an up-front fee, clinical and regulatory milestones, and sales royalties and will hold worldwide marketing rights except in Europe, where PharmaMar will promote the therapeutic itself (it has already received orphan status in Europe for treating soft tissue sarcoma). PharmaMar will manufacture the drug substance for worldwide use.

MediChem Life Sciences Inc.

Emerald BioStructures Inc.

Rigel Pharmaceuticals Inc.

Over a two-year period, MediChem Life Sciences(structural proteomics) and Rigel Pharmaceuticals (drugs based on cell response) will focus on ubiquitin ligases to develop new cancer therapeutics. (Sep.)

MediChem's Emerald BioStructuresdivision will express, purify, and crystallize Rigel's protein complexes. MediChem will then use Argonne National Laboratory's Advanced Photon Source (APS) to gather the required data to ensure the structures are at near-atomic resolution. MediChem will also crystallize some of Rigel's small-molecule drug leads. The resulting 3-D picture of the drug leads bound to target protein complexes will be used to optimize the candidate's chemical properties. MediChem will be financially compensated for the research it performs and gets milestones. It will also keep rights to specific technology, information, and improvements to its platform. MediChem has been given a right of discussion for a chance to partner with Rigel to further develop the targets. In just the last few months, Emerald BioStructures has agreed to create 3-D structures for Signal Pharmaceuticals' CNS targets and Neurocrine Biosciences' CRF-1 receptors.

Merck & Co. Inc.

Merck Frosst Canada Inc.

Pharmascience Inc.

Paladin Labs Inc.

Pharmascience's Paladin Labs(in-licenses drugs) has acquired Merck Frosst Canada & Co.'s Propyl-Thyracil (propylthiouracil), a drug to treat hyperthyroidism. (Aug.)

Propyl-Thyracil, which reports annual sales of about $467k ($Cdn708k), can also be used to treat thyroid storm (severe thyrotoxicosis) by stopping the peripheral conversion of thyroid hormones in the body. Paladin already markets Tapazole(methimazole) (licensed from Eli Lilly & Co.) in the US and Canda to treat hyperthyroidism, which is characterized by an increased metabolic rate, thyroid gland enlargement, fast heart rate, and elevated blood pressure. Paladin's other hormone products include Androderm, a marketed testosterone patch licensed from Watson Laboratories, and two Phase I products for menopausal symptoms that were originally discovered by BioSante Pharmaceuticals: an estradiol and progestative gel and an estradiol patch.

Mitsubishi Chemical Corp.

Mitsubishi-Tokyo Pharmaceuticals Inc.

NeoGenesis Inc.

NeoGenesis(applied genomics and chemistry) will use its drug discovery technologies to produce small-molecule drug leads to Mitsubishi-Tokyo Pharmaceuticals' targets. (Aug.)

NeoGenesis gets discovery and additional undefined milestones, plus mid-range single-digit royalties on resulting products. NeoGenesis' Automated Ligand Identification System(ALIS) screening technology quickly identifies small-molecule ligands with high affinity and selectivity against various protein groups. Its neoMorph library has 10 million drug compounds which it uses to screen leads and optimize them. NeoGenesis has genomics drug discovery agreements with Merck, Microcide, Oxford GlycoSciences, and Schering-Plough covering North America and Europe, but this agreement is the first it has signed involving the Japanese market.

NeoGenesis Inc.

Tularik Inc.

NeoGenesis(chemical genomics and proteomics) will combine its genomics-based drug discovery technologies with Tularik's (small-molecule drugs based on regulation of gene expression) expertise in target identification and drug development to discover small-molecule drugs aimed at certain therapeutic categories. (Sep.)

Under the collaboration, NeoGenesis receives research funding, potential milestones, and royalties on any products that Tularik develops. Both companies will equally share in the development and have a 50/50 stake in profits of any resulting drug candidates. NeoGenesis will apply its Automated Ligand Identification System(ALIS) screening technologies and neoMorph library with 10 million drug compounds to Tularik's targets to develop potential drugs in areas of interest to both companies. Tularik has 4 drugs in clinical trials and more than 20 leads that focus on cancer, cytomegalovirus, inflammation, immune disorders, hypercholesterolemia, diabetes, and obesity. NeoGenesis has partnered with companies such as Celltech, Oxford GlycoSciences, and Schering-Plough to identify targets against cancer and diabetes, as well as viral, autoimmune, antibacterial, and neurodegenerative disorders.

Orion Corp.

Orion Pharma

Pharmacia Corp.

Pharmaciawill help the Finnish company Orion Pharma complete development of its drug deramciclane, a 5-HT2 receptor antagonist, which is in Phase III clinical studies in Europe for generalized anxiety disorder. (Aug.)

Orion gets $30mm up front plus payments at clinical milestones. The companies will conduct Phase III tests in the US that will be funded by Orion, managed by Pharmacia's clinical development organization, and jointly supervised. Pharmacia will be the drug's US marketer (Orion gets the option to co-promote here) and has the right to develop it for Japan and other territories outside Europe. Orion licensed rights to the compound from the Hungarian company Egis, which had discovered it and brought it to the preclinical stage. Orion is responsible for clinical studies and registration in Europe and will share the territory with Egis: Orion gets marketing rights for the European Union and for Norway, Iceland, and Switzerland, while Egis keeps Eastern Europe, including Russia and the CIS countries.

Serono SA

ZymoGenetics Inc.

Serono licensed rights to two autoimmune programs from ZymoGenetics (a Novo Nordisk spin-off that develops therapeutic proteins). ZymoGenetics stands to receive up to $52.5mm in license fees and milestone payments, plus sales royalties. (Sep.)

The partners will share R&D costs worldwide, except in Japan where Serono will fund development. Serono will also manufacture the products and gets worldwide marketing rights, while ZymoGenetics retains a co-promotion option in N. America. If ZymoGenetics exercises this option, the companies will share N. American commercialization expenses and profits. The two candidates, TACI and BCMA, are cell-surface receptor proteins located on B-lymphocytes. When they are stimulated antibodies are produced, and in the case of autoimmune diseases, the antibodies attack the body's own cells. ZymoGenetics has discovered TACI-Ig, a soluble form of the receptor (and a tumor necrosis factor). It expects Serono to begin manufacturing clinical-grade quantities next year, and then bring the compound to animal and toxicology studies against diseases such as systemic lupus, erythematosus, and rheumatoid arthritis.

Financings

/Pharmaceuticals

Aastrom Biosciences Inc.

In a series of transactions over the past three months, Aastrom Biosciences(gene and cell therapy) grossed $11mm through the public sale of 7.7mm common shares at prices ranging from $0.82-1.78 each. (Sep.)

The company is preparing to step up its European marketing activity. It recently set up a dedicated business unit in Berlin called Zellera, to sell Aastrom's cell therapy products and pursue European R&D collaborations. This October, Aastrom received European approval to sell the DC-1cell therapy kit, used to produce dendritic cells for several types of cancer vaccines. The company also has approval in Europe to sell technology platforms capable of producing therapeutic cells for stem cell therapy. Among them are the AastromReplicell; SC-I, designed to produce bone marrow stem cells; and CB-I, a cord blood cell product. Stem cell therapy has been shown to restore blood and immune system function in cancer patients following chemotherapy or radiation.

Acusphere Inc.

Acusphere, a company engaged in ultrasound imaging and drug development, filed for an initial public offering to raise up to $69mm. (Sep.)

The company's lead product AI-700, a Phase II gas-filled synthetic polymer microsphere contrast agent, would offer an alternative to nuclear imaging for diagnosing coronary artery disease or myocardial perfusion. Acusphere is also developing a dissolvable paclitaxel, AI-850, which the company says has demonstrated improved efficacy at high doses in early clinical trials for cancer and may have additional application in multiple sclerosis and rheumatoid arthritis patients. As of June of this year, Acusphere had a cumulative net loss of $60.9mm. Investment Banks/Advisors: Thomas Weisel Partners LLC; UBS Warburg LLC; First Union Securities Inc.

Aeterna Laboratories Inc.

Aeternanetted $9.4mm ($Cdn14.5mm) in a follow-on offering of about 2mm subordinate voting shares at $5.15 each. (Sep.)

The company will put the money into its lead product Neovastat, an angiogenesis inhibitor in Phase III for non-small-cell lung cancer and renal cell carcinoma, and also in development for multiple myeloma, refractory solid tumors, psoriasis, and macular degeneration. In February Grupo Ferrer Internacionallicensed exclusive rights to sell Neovastat in certain Southern European countries including Spain, Greece, Portugal, and Italy, and Medac licensed rights in Eastern and Western Europe including Germany, Austria, Switzerland, the UK, and Scandinavia. Investment Banks/Advisors: Desjardins Securities Inc.; National Bank Financial Corp.; Dundee Securities Corp.

Biora AB

Biora(regenerative therapy for diseases of the mouth) raised $2.6mm (SEK26.5mm) with a Regulation S private placement of 2.6mm common shares at $1.01 per share (a 59% discount to market) to a Swedish investment bank and European institutional investors. (Sep.)

Biora's lead product is Emdogain, a tissue-building gel consisting of enamel matrix proteins that exist in the body only when teeth are developing. Emdogainhas demonstrated success in stimulating the formation of soft and hard tissues. Biora sells the product as a premixed gel-filled syringe to periodontologiests and dental hygienists to treat severe periodontal disease in adults, but says it has applications in wound healing and bone formation.

Endo Pharmaceuticals Holdings Inc.

Endo Pharmaceuticals(drugs to treat pain) has filed for a follow-on public offering of 11.4mm common shares. Based on the current market average, it may raise up to $127mm. (Sep.)

The company will use the funds to repay debt. Endo Pharmaceuticals markets Lidoderm(lidocaine) for post-herpetic neuralgia, and Percodan (oxycodone and aspirin), Zydone (hydrocodone and acetaminophen), and Percocet (oxycodone and acetaminophen) for pain relief. It has signed agreements with Elan Corp., Lavipharm Laboratories, and Hind Health Care. Investment Banks/Advisors: First Union Securities Inc.; SG Cowen & Co.; JP Morgan Chase & Co.; Salomon Smith Barney

GlaxoSmithKline PLC

Affymax Research Institute

GlaxoSmithKlinehas spun off its Affymax Research Institute drug discovery unit to Patricof & Co. and a group of investors including MPM Capital, Apax Partners, and Sprout Group. The venture capitalists put a total of $51mm into Affymax for a 51% combined ownership. (Aug.)

The company name will be shortened to Affymax Inc.GlaxoSmithKline gets nonvoting preferred stock in exchange for most of its Affymax interest, but will still maintain a small stake in the company; it is writing the transaction off as a $435mm charge. Lori Ratfield, a partner at Patricof, will sit on Affymax's board along with MPM's Nicholas Galakatos and Sprout Group's Kathleen LaPorte. Established in the late 1980s and acquired by Glaxo Wellcome in 1995, Affymax has an array of discovery technologies including combinatorial chemistry, molecular biology, and bioinformatics.

Hollis-Eden Pharmaceuticals Inc.

Hollis-Eden Pharmaceuticals(infectious and immune system diseases) will privately place up to $10mm of common stock with an institutional investor over the next 18 months. The shares will be sold incrementally at the company's discretion at a small discount to the market average. (Sep.)

The company will use the funds to continue developing the products in its pipeline. Hollis-Eden has its lead immune-regulating hormone, HE2000, in Phase II trials in the US and South Africa to treat HIV/AIDS and in Phase I to treat malaria (studies are being performed in Thailand) and hepatitis B and C; and HE2100 in preclinical studies to treat cancer. Its regulating hormone HE2200 is in Phase I studies to treat hematopoiesis, and preclinical trials for cancer and autoimmune disorders; HE2300 is in preclinical trials to treat infectious diseases and obesity; and HE2500 (through a license agreement with Aeson Therapeutics) is in Phase II trials for cardiovascular diseases and actinic keratosis and preclinical studies for cancer and autoimmune disorders.

Hyseq Inc.

Hyseq(high-throughput screening-by-hybridization technology) has raised $21.3mm with the private placement of shares and warrants to institutional and individual investors including Narragansett Asset Management, Vulcan Ventures, Dr. George Rathmann (Hyseq's chairman), board members, and senior management. (Aug.)

The company sold 3.04mm common shares, priced at $7 each (a 15% discount to the market average), along with warrants to buy 1.52mm common shares at $10.50 each, a 50% premium to the current unit price. (The warrant price may be adjusted to $7.95 each, pending future issuances.) Hyseq will use the funds to further its transformation from a chip and array supplier to a gene therapeutics company. The company is currently undergoing a 20% reduction in employees. It has two drugs—IL-1Hy1 and CD39L4—in preclinical trials for inflammatory diseases and heart disease, respectively. Most recently, Hyseq has signed deals with Kirin Breweryto develop drugs to treat hematopoietic and inflammatory conditions and Aurora Biosciences to screen Hyseq's protein library.

PPL Therapeutics PLC

PPL Therapeutics PLC(transgenic technology for protein production) raised $44mm (UK30mm) in a follow-on offering of 64mm common shares at a price of $0.74 per share. (Sep.)

PPL's technology, based on gene targeting and nuclear gene transferring, can be used to discover and develop human proteins in the milk of transgenic livestock. The proteins are then purified and used for the production of various therapeutic compounds. PPL's product portfolio includes its Phase III product for hereditary emphysema and cystic fibrosis, recAAT(partnered with Bayer); a compound for pancreatic diseases, tgBSSL, also in clinical trials; and a preclinical fibrant sealant microspray, to which PPL acquired the technology from Bristol-Myers Squibb in December of 2000. Investment Banks/Advisors: Deutsche Bank AG

ProMetic Life Sciences Inc.

ProMetic Life Sciences Inc.(drug purification technologies) raised et proceeds of $2.5mm ($Cdn3.9mm) in a follow-on offering of 2.87mm subordinate voting shares. The shares were priced at $0.95 ($Cdn1.50) apiece. (Sep.)

ProMetic uses genomics and proteomics technologies and has libraries of Mimetic Ligands—which are synthetic ligands designed to have specific effects on different sets of proteins—to develop drugs and diagnostics. ProMetic recently formed a joint venture with the American Red Crosswhich will develop diagnostics for prions (infectious proteins) that cause mad cow disease in cattle, and Creutzfeldt-Jakob disease in humans. Investment Banks/Advisors: Dundee Securities Corp.

Synaptic Pharmaceutical Corp.

Synaptic Pharmaceutical Corp.(protein receptor drugs) netted a total of $37.6mm in a private placement to investors Warburg Pincus and Ziff Asset Management. Sep.)

Warburg Pincus purchased $9.4mm of Series B preferred stock and $25.5mm of Series C preferred stock, and now owns 34.7% of the company. Ziff Asset bought $1.6mm of Series B preferred stock and $4.4mm of Series C preferred stock for 6% ownership. Synaptic is developing drugs based on its library of G protein-coupled receptors. It is jointly developing pain medications with Grunenthal GMBH, to which it will keep manufacturing and marketing rights in the US, Canada, and Mexico. It also has a deal with Kissei Pharmaceutical Co. Ltd.in which Kissei is funding Synaptic to conduct genomics and functional genomics research to aid Kissei in developing therapeutic compounds.

Telik Inc.

Telik(small-molecule drugs) has netted $24m with the follow-on public offering of 4mm common shares at $6.50 per share. (Aug.)

The company will use the proceeds to move TLK286 through Phase II trials to treat cancers including colorectal, ovarian, and non-small cell lung cancers and to further develop its TLK199 drug candidate for blood disorders. It will also put other orally active insulin receptor activators into Phase I clinical trials to treat Type II diabetes. TLK286 binds to glutathione S-transferase (GST)—usually elevated in cancer patients especially after chemotherapy—then releases an agent to kill the cancerous cells. TLK199 combats low white blood cell levels—a side effect of chemotherapy—by stimulating the pathway that activates the granulocyte colony stimulating factor (G-CSF, called Neupogen), encouraging the production of the blood cells. Investment Banks/Advisors: UBS Warburg LLC;Lehman Brothers Inc.; Needham & Co. Inc.; Legg Mason Wood Walker; Lazard Freres & Co. LLC

Triangle Pharmaceuticals Inc.

Triangle Pharmaceuticals(antivirals) has closed the first of a two tranche private placement to Warburg Pincus and other investors. The shares for both tranches are priced at $2.65 each (about the current market average). Triangle sold 9.6mm common shares in the first tranche, raising gross proceeds of $25.5mm. The second tranche consisting of 18.7mm common shares, of which 5.7mm may be sold to investors other than Warburg Pincus, will conclude next month. (Aug.)

Banc of America Securities LLC acted as placement agent. Triangle officials say the money will fund its R&D efforts for about two years. The company has recently laid off about 35% of its employees because of a delay in filing an NDA for its nucleoside reverse transcriptase inhibitor Coviracil(emtricitabine) as a treatment for HIV. It will now proceed with a third Phase III clinical trial of the drug, for which it expects enrollmnt to be completed in October. Triangle still intends to complete its submission for Coviracil approval in Europe before the middle of next year. Despite the setback, the company will continue trials for other drug candidates including Phase III Coactinon (emivirine) for HIV, Phase II amdoxovir (previously DAPD) for HIV, Phase I/II clevudine (formerly L-FMAU) for hepatitis B, and a Phase I drug candidate licensed from Dynavax Technologies. Triangle raised $58.2mm earlier this year from two private placements. Investment Banks/Advisors: Banc of America Securities LLC

ZymoGenetics Inc.

ZymoGenetics(bioinformatics, protein-based drugs) has filed for a $180mm initial public offering. (Sep.)

Until it was spun out last October with a $150mm private placement, ZymoGenet-ics was a protein discovery subsidiary of Novo Nordisk, which still owns 62% of its capital stock and less than 50% of voting stock. Novo Nordisk also has marketing rights outside North America to three proteins. ZymoGenetics' product candidates include rh Factor VIII, a blood-clotting agent to treat bleeding complications following cardiopulmonary bypass surgery, and rh Thrombin, a hemostatic agent to control surgical bleeding. One of its bioinformatics-derived product candidates is Taci-Ig, a soluble receptor with possible applications in autoimmune diseases, that the company has just agreed to jointly develop with Serono. Investment Banks/Advisors: Bear, Stearns & Co. Inc.; Lehman Brothers Inc; Pacific Growth Equities; Merrill Lynch & Co. Inc.

Research/Analytical

Acquisitions

/Research/Analytical

Fisher Scientific International Inc.

Cole-Parmer Instrument Co.

To expand its life sciences product offerings and increase its presence with small to medium clients, Fisher Scientifichas acquired privately held Cole-Parmer Instrument, a company specializing in the manufacture and distribution of instrumentation and equipment used in life-science research. (Sep.)

Fisher will pay $205mm in cash (using proceeds from its recent $251mm public financing) or 1.2 times Cole-Parmer's fiscal 2001 revenues. The acquired company contributes its lab equipment, measurement instruments, and fluid-management equipment—including its Masterflexline of pumping systems—for various uses such as transferring liquids, spraying tablets with coatings, and also its e-commerce, manufacturing, and information technology expertise. Fisher's self-manufactured portfolio of products includes chemicals, diagnostics, laboratory equipment,workstations, and instruments it acquired through the purchase of Covance's pharmaceutical packaging services division last December. Fisher attempted to acquire medical equipment distributor PSS World Medical for $843mm last summer, but the deal fell through.

Genomic Solutions Inc.

Cartesian Technologies Inc.

Genomic Solutions(genomics and proteomics instruments) is buying Cartesian Technologies, which makes liquid handling and automation systems for life science researchers and other scientists. (Sep.)

GS is issuing 6.8mm common shares valued at $14.4mm, will pay $2.5mm in cash, and give Cartesian shareholders options to buy 449k common shares. Cartesian has been around since 1994. Its products are used in high-throughput screening, in making DNA microarrays, and for automated chemistry research. Investment Banks/Advisors: Dain Rauscher Wessels (Genomic Solutions Inc.)

Joint Arrangements

/Research/Analytical

Applera Corp.

Applied Biosystems Group

DiscoveRx Corp.

Applera's Applied Biosystems Group(life sciences research products) signed a co-exclusive distribution agreement covering DiscoveRx Corp.'s (technologies for high-throughput screening) HitHunter chemiluminescece drug discovery tools. (Aug.)

The HitHunterassays, manufactured by DiscoveRx, are being formulated with Applied Biosystems' Tropix brand of chemiluminescence substrates to enable high-throughput screening. DiscoveRx will benefit from Applied Biosystems' global sales and marketing resources, and the agreement anticipates joint R&D projects in the future. Drug discovery labs use HitHunter in building high-throughput screens for a wide variety of targets. The assays and tools feature labeling and detection based on enzyme-fragment complementation, a core technology DiscoveRx originally developed for clinical assays; it uses in vitro complementatio of recombinant enzyme fragments to measure the interaction of biological molecules in solution, without the need for separation steps.

Array BioPharma Inc.

Icos Corp.

Array BioPharma(chemoinformatics, structural biology) and Icos will discover and develop small-molecule allosteric regulators of protein-protein interactions. (Aug.)

Icos has identified key structural features of proteins containing the I-domain allosteric site (IDAS), a structural motif on the target protein that acts as a molecular on-off switch. Small-molecule modulation of the IDAS motif keeps the target protein in the off position, limiting its binding with ligands and facilitating protein-protein disruption. This mechanism could have applications in treating various disease states, such as inflammatory conditions, and degenerative and infectious diseases. Array chemists will use these structural features as a base for developing IDAS-targeted drugs. Array gets developmental milestones and royalties, plus research funding for two years, to produce drugs against targes with the IDAS motif, using its chemical genomics drug discovery technologies. Scientists from both companies will collaborate in all facets of lead generation and optimization and Icos will have worldwide rights to clinically develop and commercialize resulting products.

Bristol-Myers Squibb Co.

Pharmagene PLC

Pharmagene Laboratories Ltd.

Pharmagene PLC(drug discovery research based on human tissues), through its wholly owned subsidiary Pharmagene Laboratories Ltd., has given Bristol-Myers Squibb a two-year subscription to its target validation technology, TargetEvaluator. (Sep.)

Pharmagene's first major subscription agreement gives it an up-front fee and quarterly payments from Bristol that could total several million dollars. TargetEvaluatormeasures the mRNA expression level of a gene in different macroscopically normal human tissue types. The system is designed to perform gene expression profiles of both normal and diseased cells, aiding scientists in selecting gene targets that might be suitable for drug discovery and speeding up the discovery process. TargetEvaluator currently provides access to expression profiles in excess of 600 targets.

Discovery Genomics Inc.

Techne Corp.

echne Corp.of Minneapolis (biotech products for the research and clinical diagnostics markets) invested $3mm in its neighbor, the start-up Discovery Genomics (functional genomics), and signed a research and licensing agreement. (Aug.)

Techne will hold a 39% stake in DG, which was organized recently around technologies licensed from the University of Minnesota. These technologies involve the use of the Sleeping Beautytransposon (a system for gene discovery and gene delivery) and Morphant "knock-downs" that suppress selected gene functions in zebrafish, a cheaper model for gene discovery than other vertebrate systems. Techne gets the right to develop antibodies and immunoassays for proteins discovered by DG and a royalty-free license to sell these products on the research market. Later it may also choose to acquire diagnostic rights as well, in exchange for royalties. Techne wil be responsible for covering a portion of DG's losses, which are expected to run under $1mm the first year and $2mm in each of the next two years.

Evotec OAI

Novartis AG

Novartis Pharma AG

Evotecwill further develop and exclusively market Novartis Pharma AG's AIDA on-bead chemistry along with its own automated PICKOscreen on-bead screening technology. The products will enable companies to increase their ability to identify drug candidates synthesized on beads. (Sep.)

Evotec's PICKOscreen—developed to meet the demands of Novartis's AIDAfluorogenic dye technology which interacts with proteins in combinatorial compound libraries—allows researchers to examine binding characteristics that compound libraries exhibit to interact with proteins using high-throughput screening. It also enables positive beads to be identified and isolated automatically. After the positive beads are separated, researchers use the AIDA technique to quickly verify the hit, then quantify it for binding affinity and characterize it structurally using mass spectroscopy. This process i intended to save companies time and money as it reduces the false-positive rate and enables only the compounds from the positively identified beads to be separated. The compound libraries indicated with the dye can be optimized and stored on-bead.

MDS Inc.

MDS Sciex

Signature BioScience Inc.

MDSand its MDS Sciex division (research instruments) will develop and market Signature BioScience's (drug discovery company formed in 1998) microwave spectroscopy (MCS) instrumentation. The resulting products will incorporate Signature's WaveSpec technology and will be sold internationally along with MDS's own research products. (Aug.)

Signature gets $10mm up front, milestones, and royalties in exchange for an exclusive license to market research instrumentation and peripherals based on MCS. The companies will share development of the research tools and MDS will be responsible for sales, marketing, and service of the products. WaveSpecassists in the target and compound selection process by enabling high-quality leads to be determined. It uses Signatures' MCS technology and lead compound generation technologies—that the company received with its acquisitionof Cambridge Discovery Chemistry—enabling real-time molecular and cellular analysis of proteins by themselves or in conjunction with small-molecule drugs.

Protagen AG

Proteome Systems Ltd.

Protagen AG(proteomics technologies for drug development) will offer its expertise in analyzing protein phosphorylation and Proteome Systems (proteomics instrumentation for drug discovery) will add its knowledge of protein glycoslylation to study post-translational modifications of proteins. (Sep.)

Glycoslylation and phosphorylation are two types of protein modifications that play a role in a variety of diseases including cancer. Proteome Systems' GlycoSuiteDBis a relational database containing information about protein glycosylation. Protagen's equipment—including the matrix-assisted laser desorption/ionization mass spectrometry, Edman sequencing, and electrospray ionization mass spectrometry—allow it to identify the smallest amounts of peptides and proteins as well as to localize post-translational modifications. Both companies will have access to the other's method and technologies. Protagen's research looks at neurodegenerative, cardiovascular, and inflammatory diseases, while Proteome Systems focuses in the areas of infectious disease, cancer, and aging. Under the collaboration, executives from each company will join the other's scientific advisory board—Protagen's CSO Dr. Helmut Meyer and Proteome Systems' CEO Dr. Keith Williams.

Supplies, Equipment & Devices

Acquisitions

/Supplies, Equipment & Devices

Coloplast AS

SSL International PLC

Simpla Continence Care

To gain a stronger presence in the UK incontinence care device market, Danish company Coloplast(medical supplies manufacturer) will acquire SSL International PLC's Simpla Continence Care division. (Oct.)

Coloplast will pay about $118mm in cash or almost three times the division's fiscal 2001 sales to acquire the Simpla business along with its urology nursing service ThackrayCare, which dispenses products and continence care advice to patients in their homes. After losing the manufacturing facility for 60% of its continence products in a fire last month, SSL felt divesting the Simpla division was the only way its brands could expand outside of the UK. The companies believe the Simpla unit's products—which include Aquadry Clear Advantageself-adhesive sheaths and Freedom clamps for male urinary incontinence; AquaCath lubricated catheters; and Trident urin drainage bags—will be compatible with Coloplast's existing incontinence pipeline and also enable Coloplast to restructure its wound care business. It is expected that the acquisition will lead to a significant improvement in Coloplast's profits and increase its share in the UK market by an estimated 10%. Investment Banks/Advisors: JP Morgan Chase & Co. (Coloplast AS)

General Electric Co.

GE Medical Systems

Imatron Inc.

GE Medical Systemsis buying Imatron (electron beam tomography scanners) for $200mm in stock, a premium of 14%. (Sep.)

Imatron has 300 employees, and for the year ending June 30 it had sales of $74.5mm and a net income of $8.1mm. The company says its scanner, which is used in cardiology, pulmonology, and gastroenterology imaging, has two advantages over conventional computed tomography systems: it is faster and it allows the scanning of multiple images without moving the patient. GE Medical is a leading provider of medical imaging systems, including MRI, x-ray, PET, and CT. Investment Banks/Advisors: Thomas Weisel Partners LLC (Imatron Inc.)

Neoprobe Corp.

Biosonix Ltd.

Neoprobe Corp.(gamma detection devices to diagnose and treat cancer) has signed a memorandum of understanding to acquire Israel-based Biosonix Ltd. (develops blood flow monitoring devices). The ransaction is expected to close by the end of the year. (Sep.)

Neoprobe will acquire all of Biosonix's outstanding stock, paying with 11.8mm of its common shares, worth approximately $5.45mm based on its 10-day pre-announcement closing average. Through the acquisition, Neoprobe adds to its portfolio Biosonix's line of blood flow products that are based on the Angle-independent Dual Beam Flow (ADBF) technology that uses Doppler ultrasound and allows blood flow volume and hemodynamic parameters to be measured noninvasively and in real-time. The company is currently developing three products based on ADBF which are expected to be launched next year: FlowGuardfor diagnosis in neurosurgicl and vascular surgeries; InFlow intra-operative system to quantitatively assess blood flow; and BioFlow cardiac function monitor that is used in the emergency and operating rooms and the intensive care unit. Biosonix estimates that its products have a market potential of over $1.5bn.

Joint Arrangements

/Supplies, Equipment & Devices

Arthrex Korea Inc.

Exactech Inc.

For a five-year period, Arthrex(distributes arthroscopic and trauma products) will exclusively distribute Exactech's (implantable devices) orthopedic products in Korea. (Sep.)

Exactech's products are mainly used to restore bones and joints that have deteriorated due to injury or diseases including arthritis. Some of its products are: Opteformbone graft material to fix osseous defects; Acumatch C-Series hip implants; Optetrak knee prostheses; and AcuDriver automated osteotome system. Arthrex is preparing for regulatory submission to get Korean approval—which may take up to a year—for Exactech's products. Arthrex will then distribute them in what it estimates will be an annual $64mm Korean hip and knee orthopedic market. Arthrex has marketed orthopedic implants including total knee replacements for Telos, France-Bloc, and Sgariato Labs to sports medicine surgeons in Korea or some time. Including this agreement, Exactech now has distribution agreements for its products in 21 countries in Europe, Asia, Australia, and Latin America.

BioTransplant Inc.

Gambro AB

Gambro BCT

Gambro AB(renal care and blood component technology) received exclusive, worldwide distribution rights (except in the US, Canada, and Japan) to BioTransplant's (anti-rejection drugs and organ transplant systems) Eligix High Density Microparticles (HDM) cell separation product line to treat cancer and other life-threatening diseases. (Aug.)

BioTransplant gets a $4mm up-front licensing fee and a milestone upon receiving CE marking. It also gets milestones at approval of future products. The companies will share revenues based on a predetermined formula. BioTransplant will develop, manufacture, and obtain regulatory approval for the system. Gambro's subsidiary, Gambro BCT(blood bank technology supplier) will take responsibility for all aspects of marketing. The cell separation devices (which BioTransplant got when it acquired bone marrow transplant therapy company Eligix) re part of the company's AlloMune system to treat cancer and other life-threatening diseases. They selectively remove desirable or undesirable cells from transplantation material. Initially the product line will be applied to the removal of tumor and immunoreactive cells for bone marrow and stem cell transplantations.

CryoCath Technologies Inc.

Endocare Inc.

In a five-year agreement, CryoCath Technologies(cryotherapy products for cardiovascular disease) and Endocare (temperature- and stent-based treatments for cancer and urology) will jointly develop cardiac surgical probes for the treatment of arrythmias. (Sep.)

The partners aim to create a product line that will treat arrythmias such as atrial fibrillation (rapid and irregular heartbeat) by using Endocare's FDA- and European-approved cryosurgical platform—a targeted therapy originally developed for prostate cancer ablation—that uses ultrasound imaging and temperature monitoring to precisely destroy diseased tissues via probes. The addition of Endocare's technology complements and builds upon CryoCath's minimally invasive catheter-based technology, which uses cryogenic temperatures to facilitate cardiologist navigation within the heart's chambers and provies ECG signaling capabilities. The systems that Endocare develops will be marketed worldwide exclusively by CryoCath under the CryoCath brand name Surgifrost, adding to its Freezorline of focal ablation catheters for treating tachyarrhythmia already sold in Europe. The companies anticipate an early 2002 launch in the US and Europe.

curasan AG

Kensey Nash Corp.

Curasan AG(regenerative biomedicine) will exclusively distribute bioabsorbable materials developer and supplier Kensey Nash's Epi-Guide dental bone and tissue regeneration product in Europe and the Middle East. (Sep.)

Epi-Guide, which recently received European approval, was acquired when Kensey bought THM Biomedicala year ago. Consisting of three layers, the product absorbs fluid from the wound, encourages healing by promoting cell proliferation within the membrane, acts as a soft tissue barrier, and resorbs after 14 weeks, eliminating the need for additional dental surgery. With an existing distribution network in Europe and the Mid-East, curasan can help establish Kensey's product in these territories. Curasan's biomaterials pipeline includes Hy-GAG (hyaluronic acid), a joint lubricant to increase mobility and reduce pain in osteoarthritis patients; Stypro, a gelatine spoge for treating hemostasis; and Cerasorb (tricalcium phosphate), an implantable, resorbable ceramic used to fill and reconstruct bone defects.

Genzyme Corp.

Genzyme Biosurgery

Gyrus Group PLC

Gyrus-ENT

Gyrus-ENTsigned a five-year agreement with Genzyme Biosurgery giving it exclusive distribution rights to two of Genzyme's hyaluronic acid surgical products—Sepragel and Seprapack—plus their respective stents. (Sep.)

The alliance may be expanded to include other ear, nose, and throat hyaluronic products. Seprageland Seprapack are used after nasal or sinus surgeries to separate tissues and control bleeding; the body resorbs them in one to two weeks. Sepragel is a viscoelastic gel that is flexible and clear; the surgeon can maneuver it into hard-to-reach areas and see the site where it is implanted when conducting postoperative exams. Seprapack is a compressed wafer that is wetted, which causes it to expand and then separate tissue. Both products entered the US market in 2000, where the companies expect to see annual sales of $4-6mm. Gyrus-ENT was formedby parent Gyrus Group PLC after it acquired Smith & Nephew's ear, nose, and throat business and Somnus Medical Technologies, which had developed surgical products to treat sleep disorders.

HealtheTech Inc.

Viasys Healthcare

Viasys Healthcare(sensor technologies) will market and distribute HealtheTech's (monitoring devices) MedGem metabolic meter. (Aug.)

Viasys's salesforce will market MedGemto hospitals, extended care facilities, private practices, and home health care organizations. MedGem is the first handheld meter that measures the volume of air, oxygen content, temperature, barometric pressure, and relative humidity with a sensor. The device is especially helpful in determining a personalized weight program for a patient. The companies have also agreed to work together in the future to combine HealtheTech's technologies with Viasys's expertise to create monitoring devices and provide services.

Jomed NV

OxiGene Inc.

Jomed NV(MIS vascular intervention) will integrate its stent technology with Oxigene's platform of vascular targeting agents (VTAs) to develop coated stents that inhibit resenosis after angioplasty or bypass surgery. (Sep.)

Jomed is performing proof-of-concept studies with drug-eluting stents that deliver Oxigene's VTAs, in order to assess the compounds' efficacy and safety. In cell culture studies, these VTAs have demonstrated inhibition of smooth muscle proliferation better even than traditional antitumor compounds. Jomed expects to release data from animal trials early in 2002.

TomTec Imaging Systems Inc.

US Medical Corp.

US Medical(US medical equipment distributor) will exclusively distribute several of TomTec Imaging Systems' (3-D and digital ultrasound machines) ultrasound products to US physicians in private practice. (Sep.)

The products work in conjunction with current devices n doctors' offices. The 3-D Smart-Scanworkstation produces 3-D images of a fetus with an existing Ob/Gyn ultrasound machine; the Echo-Com workstation allows cardiologists to conduct stress echocardiography studies; Echo-Com Review software lets physicians review and report stress studies; and the Echo Explorer and Sono Explorer interactive tutorials allow cardiology and general imaging sonographers to continue their education. US Medical already has exclusive distribution agreements with Sunrise Technologies International, Shantou Institute of Ultrasonic Instruments, and Asclepion-Meditec.

Financings

/Suplies, Equipment & Devices

BEI Medical Systems Co. Inc.

BEI Medical Systems(gynecological products) grossed approximately $7.6mm in a private placement of 2.1mm common shares and short-term warrants to purchase about 1.2mm common shares at $3.69 per unit. (Sep.)

New participants ProMed Management, HealthSouth Corp., and Brookside Capital Partners Fund Ltd. (which led the financing) joined returning investors Radius Venture Partners and Delta Opportunity Fund. BEI will use the money raised to further the marketing of its sole product, the recently FDA-approved Hydro ThermAblator(HTA)system, a minimally invasive endometrial ablation system to treat menorrhagia (benign dysfunctional uterine bleeding) in premenopausal women. In February, the company completed a $4.2mm private placement of convertible preferred stock.

dj Orthopedics LLC

Sports orthopedics company dj Orthopedics LLChas filed for an IPO of $130mm, plus an additional$20mm offered by selling shareholders. Its parent, DonJoy LLC, had been sold off by Smith & Nephew in a 1999 management buy-out and is now reorganizing into corporate form. (Aug.)

Much of the proceeds from the transaction will be used to repay outstanding debt under dj's revolving credit facility, to redeem DonJoy's redeemable preferred units, and to redeem $25mm in dj senior subordinated notes due 2009. The company designs, makes, and markets surgical and nonsurgical products that repair, regenerate, and rehabilitate soft tissue and bone, protect against injury, and treat osteoarthritis of the knee. It sells a line of 600 products in over 44 countries, mostly under the DonJoyand ProCare brands. Dj recently added a sports injury surgical products division through its purchase of Alaron Technologies. Ivestment Banks/Advisors: Goldman Sachs & Co.

Given Imaging Ltd.

Given Imaging Ltd.(noninvasive diagnostic imaging devices) completed its initial public offering, netting $55.8mm through the sale of 5mm shares at $12 each. (Oct.)

The company concurrently raised an additional $6mm through a separate private placement to PW Juniper Crossover Fund LLC. Founded in 1998, the company's Given Imaging Diagnostic Systemis a wireless imaging system that allows physicians to visually examine the gastrointestinal tract in a noninvasive manner. Patients swallow a capsule containing a video camera (the M2A capsule), which transmits images to a device worn around the patient's waist. Doctors can then download the images via Given's RAPID (Reporting and Processing of Images and Data) software to a computer workstation. The system is currently marketed in Israel, Australia, the US, and the European Union countries of France, Italy, Spain, Belgium, and Germany. Investmnt Banks/Advisors: CS First Boston Corp.; FleetBoston Robertson Stephens Inc.; Lehman Brothers Inc.

MedicalCV Inc.

MedicalCV(develops and manufactures mechanical heart valves) has filed for an initial public offering of 1.5mm units priced at $4.50 each, expecting to raise $6.75mm. Each unit contains one common share and one warrant to purchase a common share at $6.50 each. (Sep.)

The company will use the net proceeds to repay debt, for sales and marketing efforts, for engineering and regulatory expenses, to improve its pyrolytic carbon coating process, to evaluate and purchase new technologies, and to get FDA approval by 2004 for materials it uses in Omnicarbon 4000heart valves—it currently buys them from another company with FDA approval for the products. MedicalCV recently received FDA premarket approval (PMA) for its Omnicarbon aortic and mitral valves which replace diseased valves. The device has been sold in 30 countries since 1984 and about 30k valves have been implanted into patients. Investment Banks/Advisor: Equity Securities Trading Co.

Medtronic Inc.

Medtronichas raised $2.01bn with the private placement of 1.25% contingent convertible debentures due in 2021. The debentures are convertible into common stock at $61.81 each during a quarter that the common stock is more than 110% of the conversion price. Each $1k in debentures will be converted into 16.18 common shares. (Sep.)

The company will use the proceeds to pay for the May acquisitions of MiniMedfor $3.2bn and the Medical Research Group for $400mm. Medtronic's alliances this year include the licensing of AVI BioPharma's NeuGene antisense compounds; working with Scios to evaluate its Natrecor with Medtronic's heart failure devices and implantable infusion systems; Daiichi Pharmaceutical's development of Medtronic's intrathecal baclofen therapy for spacticity; its acquistion of VenPro's Contegra product line; and its distribution of Spinal Dynamics' Bryan Cervical Disc System.

Ortec Internatinal Inc.

Paul Capital Royalty Acquisition Fund is making a non-equity investment of up to $25mm in Ortec International(tissue engineering), in exchange for 10 years of royalties on North American end-user sales of an Ortec biomaterial for wound healing. (Aug.)

The product is OrCel, which has been approved under an HDE (humanitarian device exemption) for hand reconstruction and donor sites for epidermolysis bullosa. An FDA advisory panel has also recommended its approval for use in donor sites for burn victims, and the company is conducting clinical trials for venous and diabetic skin ulcers. Ortec received $5mm at deal-signing and another $5mm is contingent on FDA approval of the burn application. Ortec can opt to take another $5mm at specified milestones, and potentially $10mm more will be available upon further milestones if the companies both agree.

E-Health

Acquisitions

/E-Health

NaviMedix Inc.

Fiekey Inc.

NaviMedix(online solutions to connect physicians and hospitals to health care partners) has acquired Firekey Inc., a company that provides internet-based connectivity services to the health care industry. (Aug.)

NaviMedix recently raised $27mm to acquire the necessary assets to globally expand its services. Through this acquisition, the company now gets access to a broader client base as well as Firekey's point-of-care solutions n-Suiteand n-Script, which NaviMedix will integrate by year-end with its NaviNet system that provides real-time, online tools to approximately 30,000 physicians and health care providers. N-Suite helps physicians with their administrative and clinical processes, while n-Script, a wireless, hand-held electronic prescribing system, offers formulary management, automated prescription refills, dosage selection and monitoring, and patients' medical histories.

Fiancings

/E-Health

e-MedSoft.com

E-MedSoft.com(provides medical communication via the Internet) has raised $40mm with the closing of the first tranche of a $54mm convertible debenture private placement. Societe Financiere du Seujet Ltd. bought the 30-year debentures that convert at $3.02 per common share. (Oct.)

The company recently acquired Chartwell Diversified Servicesand signed letters of intent to acquire Addus Healthcare and TLC Health Care Services, providers of home medical equipment and services. The acquisitions are intended to further the company's goal of transforming from a company that enables communication and medical information to be exchanged between doctors, hospitals, clinics, HMOs, insurers, and government agencies, to becoming a worldwide distributor of infusion and respiratory therapies and medical equipment. After the acquisitions have been completed, the assets of each company will be combined into e-MedSft's subsidiary, Chartwell Services Organization. Just last month he company sold $83mm of restricted stock to an institutional investor.